Government Regulation no. 18 of 2021 - Right to own an appartment

jukung11

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Here is the law:

Here is an article from Indonesian lawyers at Baker McKenzie (international law firm). You may need to open it incognito to pass the paywall.

I have seen a lot posted recently regarding changes of laws for visas and posted the changes of law for property ownership. Many on the forum seem to still be under the impression that foreigners don't have hak milik rights in Indonesia. The law change last year gave right of ownership over stacked units (Hak Milik Atas Satuan Rumah Susun, HMSRS). As of last year, a foreigner with a ITAP can buy/sell apartments without any experation dates involved in a hak pakai title. I am not sure I would trust construction/value of aparments longer than the renewable hak pakai time period of 70 years. It is still nice that there is not detriment to the title that it is easier to sell and get a mortgage.

Many articles compare this to opening of hak pakai rights for foreigners in 2015. This law revokes that law. There is a caveat....

However, foreigners may only acquire HMSRS title to apartments in special economic, free trade or free port, industrial, or other economic zones. ”Other economic zone” is defined as an urban or suburban zone, tourism zone, or a zone that is suitable for vertical housing development, and which has a positive economic impact for the public.

This seems like a large enough loophole that it will encompass most apartments.

There is some dissent. Here is a law review article from Universitas Udayana claiming the law is unconstitutional and contradicts the Agrarian Law against foreign ownership.

What are everyone's thoughts?
Will someone have standing to overturn the law?

Does the loophole open up enough apartment ownerships to foreigners?

My personal review of the Indonesian property market, with time-value of money and with risk and return factored in, it is more expensive to own than to rent in Indonesia. Does anyone find the property market more attractive with hak milik title?
 

Helpful Herbert

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With apartments I would definitely agree, better to rent. For a start even if you buy, you still have to pay monthly service charges that are usually quite high. Also they can change the rules for foreigners at any time.
 

centurion

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Here is the law:

Here is an article from Indonesian lawyers at Baker McKenzie (international law firm). You may need to open it incognito to pass the paywall.

I have seen a lot posted recently regarding changes of laws for visas and posted the changes of law for property ownership. Many on the forum seem to still be under the impression that foreigners don't have hak milik rights in Indonesia. The law change last year gave right of ownership over stacked units (Hak Milik Atas Satuan Rumah Susun, HMSRS). As of last year, a foreigner with a ITAP can buy/sell apartments without any experation dates involved in a hak pakai title. I am not sure I would trust construction/value of aparments longer than the renewable hak pakai time period of 70 years. It is still nice that there is not detriment to the title that it is easier to sell and get a mortgage.

Many articles compare this to opening of hak pakai rights for foreigners in 2015. This law revokes that law. There is a caveat....



This seems like a large enough loophole that it will encompass most apartments.

There is some dissent. Here is a law review article from Universitas Udayana claiming the law is unconstitutional and contradicts the Agrarian Law against foreign ownership.

What are everyone's thoughts?
Will someone have standing to overturn the law?

Does the loophole open up enough apartment ownerships to foreigners?

My personal review of the Indonesian property market, with time-value of money and with risk and return factored in, it is more expensive to own than to rent in Indonesia. Does anyone find the property market more attractive with hak milik title?
Reading the opinon from Baker McKenzie foreigners will not have right anytime soon to get whatever Hak Milik type of certificate on apartment or land, as the regulations are inconsistent.
 

jukung11

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Reading the opinon from Baker McKenzie foreigners will not have right anytime soon to get whatever Hak Milik type of certificate on apartment or land, as the regulations are inconsistent.

That is the same as the abnrlaw article. It conflicts with general understanding that by granting foreigners hak milik rights, it conflicts with the agrarian law. Are you familiar with any court legal challenges? All other laws that I have watched get challenged in Indonesia (dual citizen and post-nup) had an aggrieved party that had the right to challenge the law as unconstitutional (locus standi). Since Indonesian law is patterned after Dutch, do they not have this? Who would be aggrieved? Wouldn't the law stand until challenged and overruled?
 

centurion

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That is the same as the abnrlaw article. It conflicts with general understanding that by granting foreigners hak milik rights, it conflicts with the agrarian law. Are you familiar with any court legal challenges? All other laws that I have watched get challenged in Indonesia (dual citizen and post-nup) had an aggrieved party that had the right to challenge the law as unconstitutional (locus standi). Since Indonesian law is patterned after Dutch, do they not have this? Who would be aggrieved? Wouldn't the law stand until challenged and overruled?
Challenging Indonesian law by a foreigner has a near zero chance of success. Post-nup case was challenged by an Indonesian citizen (and won).
 

fastpitch17

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A foreigner can certainly challenge Indonesian laws or more so how they were interpeted and enforced in a court. Said foreigner better know Indonesian laws inside and out because any legal representative they hire probably will not.

I believe the only person in this forum is Atlantis who has been successful and I would bet he was more versed in the laws than who may have represented him or those he faced in court.

The unprepared will more than likely face a never ending hands out due to so many in line with kids that need new shoes. Then, still lose.
 

Teabag

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The law change last year gave right of ownership over stacked units (Hak Milik Atas Satuan Rumah Susun, HMSRS).
There is even not any certificate at all for apartment owners. My wife's relatives 'own' an apartment and all they got is a buying contract from the developer which states the ownership of a specific apartment. There is no hak milik certificate and they all have no idea about splitting land ownership into pieces for apartment owners, you can't get any loan at any bank.

For sure, they gonna pay SideCost, Sinking Fund, Water and Electricity. The best is, if you're late on payments, the building management (aka mafia) is gonna turn off your water in the appartment.

Electricity is pre-paid, if you don't pay, your sitting in the dark (with no water too...)
 

jukung11

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Why would the foreigner be the one challenging the law? That doesn't make any sense. The law explicitly gives the foreigner the right to purchase apartments with freehold title in any urban area. Why would the foreigner challenge the law as illegal?

Would the land and title department refuse to register the title in the foreigner’s name? If so, then there would be no sale of the apartment. Has anyone experienced that?

The right to purchase hak pakai titles has been around since 2015. Has anyone read or know of the land and title refusing to register ownership to a foreigner under the law that this new law replaced?
 

centurion

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It looks like I was wrong, the Government has been very efficient the bylaw came out on November 1st, 2022 by BPN. Foreigners can buy land and apartments, new or already built, even with just a visa and can pledge for loans and inherit, in designated provinces.
 

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Dave70

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It looks like I was wrong, the Government has been very efficient the bylaw came out on November 1st, 2022 by BPN. Foreigners can buy land and apartments, new or already built, even with just a visa and can pledge for loans and inherit, in designated provinces.

Apartments are non-landed properties, to say “foreigners can buy land and apartments” is inaccurate or misleading. To avoid misunderstanding, the law should merely state “foreigners can buy apartments” without mentioning the land. Indeed, each individual unit will own a tiny portion of the land upon which the apartment was built. But when the apartment owner decides to sell his unit in the future, he doesn’t advertise it as “Dijual Tanah dan Apartemen”, never heard of that. If it’s a landed property like a bungalow which is directly attached to the land, then it can be advertised as “Dijual Tanah dan Bangunan”. Can the law be used by real estate agents to sell landed properties to foreigners? I hope no foreigners become victims.
 

centurion

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Apartments are non-landed properties, to say “foreigners can buy land and apartments” is inaccurate or misleading. To avoid misunderstanding, the law should merely state “foreigners can buy apartments” without mentioning the land. Indeed, each individual unit will own a tiny portion of the land upon which the apartment was built. But when the apartment owner decides to sell his unit in the future, he doesn’t advertise it as “Dijual Tanah dan Apartemen”, never heard of that. If it’s a landed property like a bungalow which is directly attached to the land, then it can be advertised as “Dijual Tanah dan Bangunan”. Can the law be used by real estate agents to sell landed properties to foreigners? I hope no foreigners become victims.
The regulation specifically mentions that landed property (houses) are in consideration as well.
 

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